Stem cell companies awaiting sea change

By David Morrill
Staff writer, Insidebayarea.com

A cure for diabetes? New organs? Spinal injury repair?

For more than a decade Bay Area scientists and companies have thrown out grandiose possibilities that might be possible via stem cell research.

But for the better part of that time, stem cell companies hopes have been hog-tied by a Bush administration that limits funding available to research. President Bush has been opposed to the science because he feels the destruction of human embryos is immoral.

President-elect Barack Obama has made it clear that one of his first executive orders will be to reverse this policy. Companies such as Alameda-based Biotime, Menlo Park-based Geron and South San Francisco-based VistaGen finally see this as a sign that their chance to operate freely might soon be near.

“It is a fact that President Bush’s policies have had a dampening effect on research over the past years,” said Michael West, chief executive of BioTime. “Many companies, both smaller biotech and larger Pharma companies, have been reluctant to invest in the technology due to the uncertain federal policy.”

Embryonic stem cells are early-stage cells capable of being grown into hundreds of cell types that are used in the human body. Stem cells created prior to 2001 are not restricted by research funding, but only about 21 of those lines are available, most created in ways that preclude use in humans.

“I think it’s going to be a significant positive because it will open up
additional grant funding for research,” said Ralph Snodgrass, CEO of South San Francisco-based VistaGen. “The last years have been difficult and frustrating on a number of different levels.”

The biggest change would likely be that the National Institutes of Health will be able to open up additional grant funding for research.

When scientists isolated the first stem cells from a human embryo in 1998, it was heralded as a breakthrough. A decade later, no company has sought approval for a therapy using embryonic stem cells, and the $150 million “stem cell market” consists entirely of equipment used to study the technology, according to research firm TriMark Publications. Most investors have instead focused on the $300 billion U.S. drug market that has been seen as less of a risk.

It also has allowed other countries that do embrace embryonic cell research, such as China, to catch up, said Michael Werner, president of Washington, D.C.-based the Werner Group, which consults life science companies.

“Not only will this have a direct implication on the federal funding, but hopefully now any kind of stigma or cloud over the embryonic stem cell industry will be lifted,” Werner said. “This science is so valuable, and now we will really be able to pursue all these avenues of research.”

West says he knows “concrete examples” of companies and academia not doing anything in stem cell research because of fear over uncertain federal policy.

As early as last week there’s been a shift in attitudes.

Pfizer Inc., the world’s largest drugmaker, is scheduled to open a new research center this month to research stem cells to treat nervous system disorders. The second largest drug maker, GlaxoSmithKline, has put money into stem cell development as well.

At the BioTime headquarters, there is state-of-the-art equipment ready to be utilized to study the technology once funding to do so is received.

Some analysts say the new challenge for these companies will now be to get private funding from venture capital firms.

Shareholders seem to have their eyes set on stem cell companies as well.

On Monday, shares of BioTime climbed 16 percent to $2.01. Since May 19, when shares were 46 cents, it has climbed 357 percent during one of the most challenging times on Wall Street.

West says both he and his colleagues hopes Obama will set ambitious goals for science, similar to President Kennedy’s target to land a man on the moon.

“A clear signal from President-elect Obama that he will make it a priority to put in place federal policies accelerating new medical technologies to alleviate human suffering and cut the medical costs associated with the baby-boom generation age wave, could have a dramatic effect on the industry,” he said.

The Associated Press contributed to this article. Staff writer David Morrill covers biotechnology. He can be reached at dmorrill@bayareanewsgroup.com.